OFGEM regulation failing the consumer

heat_or_eat10:29 Monday 2nd February 2015
BBC Radio Cambridgeshire

PAUL STAINTON: We’re also talking about energy, and asking whether or not the Big Six energy companies are cashing in on the falling cost of oil. Now according to energy watchdog OFGEM they are. It says the Big Six are not passing on savings from the falling price of oil to customers. The Big Six have promised to lower their prices over the coming months, but experts say they’ve nowhere near gone far enough. So are you left feeling cold by the 2015 energy price rip-off? And what can be done about it? Well joining us now is the Labour Parliamentary candidate for Cambridge Daniel Zeichner. Daniel morning.
PAUL STAINTON: Labour of course, the party offering price freezes if they win the next election. And also with us is Peter Thom from Green Heat in Girton, who are specialists in home energy efficiency. Morning Peter.
PETER THOM: Morning Paul. How are you?
PAUL STAINTON: I’m very good. Daniel first of all if I may, you’re being blamed, aren’t you, the Labour Party, for some of these companies not reducing their prices? Apparently they’re scared of the effect that your cap might have if you win an election.
DANIEL ZEICHNER: That’s what they’re saying. And of course they would say that, wouldn’t they? I think the evidence from OFGEM is absolutely clear. The Big Six haven’t been passing on the savings. And the longer term issue is how do we actually change the market so it works more effectively. And that’s the second half of our plan really. It’s not just a price freeze. It’s about making sure there’s more transparency. because at the moment these companies have some very complicated procedures, which make it very hard to actually find out what they’re charging, and where their costs are going. And they claim not to be making profits, but actually everybody knows they are. So it’s actually about changing the way the system works in the longer terms that’s probably the more important thing. And as you’ve got Peter on the line, I’m sure he’ll agree that the really really big goal is actually to use less energy in the first place. And the massive gain would be if we can improve particularly the efficiency of many of our homes, which I’m afraid at the moment are still quite inefficient.
PAUL STAINTON: Peter, John the Hippy, he’s got a very eco-friendly home. He was saying earlier that he never worries about it. It costs him £700 a year. He’s got his heating on all the time, 20° to 23° on all three floors, and his basement. And when anyone decides to buy a car, say £10,000, and use it, instead of buying that car, use that £10,000, get some solar panels and improve your home.

PETER THOM: Yes. Somebody’s got a very good point there. But of course not everybody has got the spare cash to do that. But I think what Daniel’s saying is right. We do need to conserve energy. You ran a story earlier that it was the warmest year on record last year, and this is down to what we’re doing as humans. And we have got a (responsibility).. we’re custodians of this planet. We do need to leave it in a good state for future generations. I know a lot of people say this and they just pay lip service to it, but I think all the political parties really need to get together and get a grip on this, and get something done. We’ve got 5% VAT on fuel. It should be at the full rate really. Stop all these meddling deals that each government seems to bring in about raising money to do schemes that never work. The Green Deal’s been a failure for example. So we’ve all these schemes running, yet energy is still relatively inexpensive. We’ve got a regulator that doesn’t regulate, and it’s a mish-mash. The whole energy policy in this country is absolutely amazing, and it just doesn’t work. And we need to do something about it.
PAUL STAINTON: Why has the Green Deal failed? Because that was meant to entice people into getting cash to make their home greener, wasn’t it?
PETER THOM: Well I wrote a letter to the Prime Minister last week on this. The thing is the Green Deal was set up for everybody to engage, but nobody .. certainly small installers like us have not been able to engage in the Green Deal. It’s set up again for the Big Six. So the big boys get all the action on it, we all get left out in the cold, and the customers get ripped off. As you know I run a heating business as well, and we install boilers. A lady who just placed an order with us has just told me it’s British Gas £1000 dearer than us. They’re just ripping people off, and it’s just not good.
DANIEL ZEICHNER: Can I just come in there Paul?
PAUL STAINTON: You can Daniel. Yes.
DANIEL ZEICHNER: Yes. Yes. The Green Deal in principle was a good idea, because people will make long term savings if they invest in insulation=, improving the efficiency of their homes. But the terrible mistake the Government made was they set the interest rates so high on the loan that it just didn’t make any economic sense for people to use it. And we warned about this at the beginning. So I don’t think the principle was wrong. But Pete is also right that again, it has been taken over by the big energy companies. And that’s what we’ve got to try and change. And that’s why we’re talking about a Green Investment Bank that can actually bring extra resources in to help make these things happen. It’s an astonishing thing that we’re about the only Western country these days which doesn’t have a proper home insulation scheme supported by the Government. We use to have it, but it’s gone in the last few years, to be replaced by the Green Deal that hasn’t worked.
PAUL STAINTON: And then we’ve got the tariffs changing all the time. I haven’t got solar panels. I could have, but I have no idea what the tariff is, whether it’s good for me or not good for me. I don’t know how to get hold of money from the Green Deal. It’s so blinking complicated, isn’t it? And that is the problem. Don’t add something else. Simplify!
DANIEL ZEICHNER: Simplify. I get the message Paul. We get the message. (LAUGHS)
PAUL STAINTON: Nationalise! That’s the message from a lot of people this morning. Was privatisation ever a good idea of our utilities?
DANIEL ZEICHNER: Well I guess that’s one for me. We opposed it at the time. The big problem with all these capital intensive industries was that they were competing against things like the Health Service for investment. So there was a case for taking it out of the public sector, but I have to say I think we’re now seeing many of the downsides of that. And labour isn’t committing to renationalisation. Don’t be under any illusions. There’s no magic solution to this.
PAUL STAINTON: Could be a vote winner though. Could be the big policy that Ed Miliband needs.
DANIEL ZEICHNER: Well hang on a second. It’s not just about winning votes. It’s about getting things right for the future. And the important thing actually the industry needs is stability and certainty. If you’ve got some stability for a while, then people can invest. And that’s why we’re saying that we will set very clear targets through to 2030 to allow long term investment to actually deal with some of these things.
PAUL STAINTON: But nevertheless this cap, this cap that you’re going to bring in, is causing problems. And the companies have said they’ve got to be careful. They don’t know what effect it’s going to have. It could have the adverse effect of forcing prices up before the election, couldn’t it?
DANIEL ZEICHNER: Well that’s down to the energy companies. I think what it shows is this market isn’t working, because with falling costs, they ought to be falling over each other to compete for lower prices. but of course they’re not. It’s a herd mentality. They’re really operating as a cartel, and they’re keeping prices up artificially.
PAUL STAINTON: And the regulator’s got no teeth. Will Labour change that?
DANIEL ZEICHNER: Yes. We’ll scarp it and replace it with a much much more powerful regulator. A lot of it does go back to privatisation. At the beginning remember the theory was from the Conservatives you wouldn’t need regulators because the market would sort it all out. Well of course that hasn’t worked. And the same for virtually every area we look at, we’re now dealing with what is effectively market failure, and that’s why we need new stronger regulators. It’s quite simple basically. Labour is going to be on the side of the consumers, and that’s what the companies are reviling against, because they just want to make as much profit as they can.
PAUL STAINTON: It can’t be right. We’ve heard of people this morning saying they have to go out during the day to libraries and shopping centres, because they daren’t put their heating on. Heard from Jimbo in Cambridge earlier saying he’s not had his heating on for three weeks, because he can’t afford it. Prices have gone down by 4% for gas in some places. Others have still to put their prices down. Yet the cost of oil has gone down by 60%. It beggars belief, doesn’t it?
DANIEL ZEICHNER: It does. And these are awful, these cases of people not being able to heat their homes. And of course that’s the other side to the coin of this one, so to speak, because this is because people haven’t got enough money in their pockets to spend. So when you’ve got prices staying high, and yet wages and incomes absolutely stuck, this is why you get these kind of problems. And I have every sympathy with people in that position.
PAUL STAINTON: What should people do Peter, if they’re thinking about going green, if they’re thinking about investing some money? Is it a good time to get solar panels, to insulate your home? Is now the time Peter, or have they missed the boat?
PETER THOM: Well it’s always a good time to invest in your home, because whatever you do is going to add value to your home, and reduce fuel bills, and reduce carbon emissions. So it’s a win-win for everybody. But of course the thing is is what to do, and there is a lot of confusing messages out there. We’ve been doing this for twenty, thirty years now. We’re celebrating out twenty fifth anniversary this year, and we’ve been doing it a lot longer than that. We advise people, we do energy audits, we can advise people on the best things they can do for returns on their investment. If they want to go to renewables, or they want to stay with reliable fossil fuel, because gas is going to be here for many many years. And it is working out which is the best thing, how to get the best return, what tariff there is on the feed-in tariff for the solar panels. There are these schemes about, and how people can maximise on them. But people really do need to take the opportunity to invest in their homes, to make them more efficient. We have got I guess one of the most inefficient housing stocks in Europe, which is a bit worrying. But we would like to see governments have proper policies in to eradicate fuel poverty. I think there’s over four million in fuel poverty that can’t afford to heat and eat, and they need to do something. We’ve had policies and commitments in the past to actually eradicate fuel poverty, and in my mind over the last twenty five years that’s been talked about all that time, but we still have four million, or over four million, in fuel poverty. And in our society that can’t be acceptable.
PAUL STAINTON: And that’s down to every government, whatever flavour, whatever colour.
PETER THOM: Yes. And again what we hate is seeing it as a political football. Although it will end up being that, it will no doubt come up on the manifestos.
PAUL STAINTON: But it’s more important than that, is what you’re saying. Politicians of all colours need to .. there’s quite a few issues right now. It seems politicians have got to come together on a range of topics for the greater good. Peter, it’s lovely to talk to you this morning. Thank you for coming on. That’s Peter Thom, who’s from Green Heat in Girton, Green Heat specialist home energy efficiency company. Said the Green Deal a complete waste of money, complete waste of time. And politicians need to come together and have one simple message, so we don’t all get confused, so we know what to do. You heard from Daniel Zeichner as well, he’s the Labour Parliamentary candidate for Cambridge.